Customers don’t measure up

Supplier organisations have two sorts of customers – external and internal:

External customers pay for the goods or services private or public sector organisations offer them – it’s their money alone which keeps businesses in business and public services alive, and pays every employee and shareholders dividends – they decide whether or not to buy or use products or services based on price, quality and service levels offered them

Internal customers are fellow-workers further ‘down-the-line’ who depend on you to supply them with raw materials, semi-finished goods or paperwork so they can complete their work – they want to be passed stuff which is ‘right-first-time, not faulty or late causing them extra work and delays which also increases costs

Given such importance, one would expect all organisations to closely monitor how satisfied their customers were with what they were being offered – but most don’t know such important details

Instead, they rely on measures of sales volume, value and trends plus their own internal views on how good they are – if they’re not negative, they assume all things must be hunky dory – hence, many are surprised when existing customers become ex-customers

To be fair:

Some survey their customers’ satisfaction levels, albeit most do this badly – too infrequent or too often, thus irritating customers – sample sizes and/ or methods used are unrepresentative or inadequate – hence, they rarely identify important areas where they’re going wrong

Some analyse customer complaints, returns and warranty claims but they’re usually half-hearted and little effort is put into making amends, thus missing a golden opportunity to convert unhappy customers into repeat sales – they can also suffer a double whammy here as unhappy customers usually tell more people about their bad experiences than happy ones do about theirs, so more potential sales are lost

Some count customer footfall and monitor their average total purchases

However, most organisations have no good idea what their customers really think about what is offered them

In addition, most don’t fully understand the nature of the demand for their services – they assume all demand is equally valuable

But much demand (e.g. output units, episodes, incidents) is repeat demand for the same good or service simply because the original demand was not met ‘right first time’ – goods or services provided were flawed in some way requiring extra costly time to put things right whilst earning no extra revenue or funding e.g. units having to be replaced or patients catching MRSA whilst a patient in hospital

In many organisations, such failure demand can be over 50% of their total, but few know it – and even fewer believe it when told

And the cost of such failure demand to the customers is never considered – e.g. the cost of their wasting time, suffering longer, having to cope with broken down units or making repeat visits to hospital for the convenience of consultants, not them

Conclusions:

The business mantra, nowadays is “Put Customers First”

Such words are easy to say, and even easier to ignore

What most organisations actually do is put themselves first – they look inwards, not outwards – and they see only what they want to see

Hence it’s no surprise when experts claim there to be a long long tail of underperforming organisations in ALL sectors